A blow to artists seeking a greater share of digital profits.
Eminem’s music publishing company has failed to prove that Universal Music Group (UMG) owed him royalties for music downloaded over iTunes or sold as cellphone ringtones.
After a trial that lasted a little over a week, a jury ruled Friday in favor of UMG.
Eminem’s F.B.T. Productions did win $159,000 in a separate claim that said UMG had made accounting errors in payments of royalties between them and Eminem.
F.B.T., owned by brothers Jeff and Mark Bass, discovered Eminem and signed him to an exclusive recording deal in 1995. As such, they sued UMG, the world’s largest music company, on the rapper's behalf two years ago, saying UMG did not deserve the more than 80 percent of the profits they were making on his music.
F.B.T. was seeking to decrease their take to 50 percent; F.B.T. wanted $1.47 million in damages for unpaid royalties.
The judgement was a blow to musical artists seeking greater share of the profits in a world dominated by digital downloads.
Though he was disappointed with the verdict, Joel Martin -- who operates Eminem’s publishing company, 8 Mile Style and was a plaintiff in the case -- tried to remain optimistic about the awareness the case may bring to those in the music industry.
"We just thought if we had this decision that went our way, the name Eminem carried so much weight that it could really make a difference," Martin said. "But what's important is that this opens the door for other artists, and it doesn't mean that other people don't have the right to go to their record companies and say, 'What does our contract really entail?' and take it to court to see if it's right."
Martin said he will likely appeal the decision.
"The case still alerts the industry to the issue," agreed Jay Cooper, an entertainment lawyer with vast experience in the music industry. "Do remember that the decision was based on the individual contract, and another case on another different contract could bring a different result."
Glenn Pomerantz, the lead attorney for UMG, did not immediately respond to a request for comment.
"We're pleased with the jury's verdict," said Peter LoFrumento, a spokesman for UMG. "We were confident throughout the case."
Currently, when an Eminem album is downloaded on iTunes, it falls under the “records sold” provision of his recording agreement, giving him an 18.23 percent royalty rate. F.B.T. was trying to prove that a digital download is not a record sold but rather a license and should therefore fall under the “master license” provision. That would entitle the artist to a 50 percent royalty rate.
F.B.T. argued that UMG incurs minimal costs when providing downloads to online retailers -- especially when compared to the cost of physically producing and distributing CDs -- and the difference should go back to the artist. UMG countered that they put millions into building the technology to enable the digital transfer.
The intricacies of the agreements, Martin believes, may have been too confusing for the jury. In retrospect, he said, he should have presented the case before a judge.
"Our lawyer is upset because it doesn't appear the jury understood exactly what the underlying situation was as it applied to the license versus the record sale issue," he said.
Cooper disagreed. "While the language of these contracts are difficult, they are generally explainable," Cooper said, "and I think it's possible to understand them"
Martin said he planned to speak with Eminem, who was not a party to the suit, when he arrived back to Detroit.
"I'm sure he's gonna continue making his record," he said. "It would have been nice for him to be able to be compensated."